Budget is the estimation of a company’s
promotional expenditure for a period of time. It is the money a company is
willing to set aside to accomplish its objectives. Advertising budget is the
toughest part of any business. How much to spend, where to place the ad, how often,
what message to send and to whom is a very difficult process.
When creating the advertising budget, a
company must weigh the tradeoffs between spending 1 advertising dollar the
amount of revenue. That dollar will bring in as revenue.
Advertising
budget – factors that must be considered
-
Market share and consumer base:
Market share is the percentage a market
accounted by a specific entity (organization)
Customer base is the group of customer
who repeatedly purchase the goods or services of a business. These customers
are a main source of revenue for a company. An advertiser should always focus
into market share and customer base while allocating money for advertising.
-
Competition
Organization should always consider the competitor’s
strength and weakness while allocating many in the field of advertising. An
organization SWOT analysis is a tool for finding out the hidden strength and
weakness which are present in the competitors.
-
Advertising frequency
It is the number of times an average
person in an advertiser target audience is exposed to an ad over a period of
time. An adviser should always look in to the fact that how many times an ad is
shown in different media. It will be also worth if an organization is able to
find out the number of target audience who is going through the ad which is
shown in the different media.
-
Product substitutability :
When a company starts marketing or
selling one product instead of another because it is more profitable for them
it is known as substitution without the purchases knowledge or consent.
-
Stage in the product lifecycle:
It is a business analysis that attends to
identify a set of common stages in the life of commercial products. In other
words PLC is use to map the lifespan of the product that is the stage through
which a product goes during its lifespan. The various stages of PLC are:
·
Introduction
·
Growth
·
Maturity
·
Decline
